YOU TOO! CAN MAKE MONEY IN RENTAL PROPERTIES: 7 ESSENTIAL STEPS

By Larry T Judd

Real Estate Rental Investments, Beginners and Landlords

7 Essentials to Rental Investing & More People You Need Before You Buy, Purchasing Property, Managing Your Rentals, Who To Rent To, Importance of Maintenance, How To Acquire Other Rentals You Don't Own, and Springboa

• Language: English
• Publisher: JUDD PUBLISHING LLC
• Release date: Mar 18, 2024
• ISBN: 9798869254955

Book preview

INTRODUCTION

Does the idea of getting into real estate and property management frighten you? If so, you’re not alone.

Everyone knows about the real estate all-stars who own hotels and casinos worldwide…but I also know some people get into the real estate game and wind up worse off than they were before. You might be afraid to get into the business for several daunting reasons:

Lack of knowledge and experience in real estate investment.Many beginners in real estate lack knowledge of the industry. If you don’t know the steps to purchase a property, how to find and secure tenants, or how to manage the property once it’s been secured, it can be difficult to even start.

Difficulty finding the right investment property…that also fits their budget.Renovating a house isn’t the easy thing some of those home improvement shows make it out to be. Finding the right property can be so daunting it puts people off the very idea of entering the real estate market.

Uncertainty if the investment is worth the risk.It’s only natural you would want your property to make a profit, but will the profit be worth the initial risk? You have many factors to consider beyond the location and condition of the house.

Managing and retaining tenants.Everyone has heard of the tenant-from-hell stories, but it’s a challenge to screen your tenants, let alone handle their complaints. And when it’s time to manage evictions, people know they’re in for a real headache and are afraid to even consider investment.

The good news is you don’t have to be afraid of real estate and property management any longer. This book was written to give you the tools and shortcuts to maximize your earning potential.

In this book, you’ll discover the 7 Essentials to Rental Investing and how you can avoid the most common pitfalls investors and landlords make. Each chapter is written to be read quickly and absorbed easily, avoiding jargon that obfuscates the lesson. First-time investors will find this the perfect manual of digestible real estate investment goodness.

There are multitudes of books like this one on the market, no question about it. That’s why I designed this book specifically for beginners. I provide step-by-step guidance and offer practical insights that will empower you to make informed decisions and take calculated risks to reach the heights of your real estate investment journey.

With the help of this book and the advice within, you will gain a deep understanding of the essential principles, strategies, and processes involved in real estate investing. You’ll gain comprehensive knowledge about market analysis, property selection, tenant screening, property maintenance, portfolio expansion, and so much more.

It took me over thirty-five years to accumulate the knowledge shared in this book. It worked for me, and it can work for you, too. If you want a better life where you can be your own boss and control your own destiny, this book can show you the path.

All you have to do is turn the page…(or swipe if you’re on Kindle!)

1

SO YOU WANT TO BE A LANDLORD?

In the real estate business, you learn more about people, and you learn more about community issues, you learn more about life, you learn more about the impact of government, probably than any other profession that you know of.

JOHNNY ISAKSON, US SENATOR

Step one, buy property. Step two, get tenants. Step three, reap a profit. Simple , right?

As it turns out, nothing in life is simple. Real estate investing covers a broad spectrum. It’s more than just owning property and renting it out. The spectrum can range from passive strategies, such as buying real estate-related stocks on a public exchange, all the way to the more active approach of buying individual properties on the direct market. The properties purchased could be resold for profit or rented out for steady and ongoing income.

It might seem counterintuitive, but investing in rental properties is not a passive income strategy. Rather, it is one of the most active and time-consuming forms of real estate investing you can engage in. It requires drive and commitment to succeed as much as knowledge.

In this chapter, I’ll discuss some of the basics of investing in rental properties. I’ve included an overview of how to find a viable rental property, as well as how to obtain sometimes tricky financing to purchase it. You’ll learn how to identify what will be involved with operating and maintaining your new property, along with the good, the bad, and the ugly of these types of investments. I have also included a real estate investment approach, should you decide direct investment is not the right path for you.

INCOME PROPERTY INVESTMENT—INVESTING IN RENTALS

For simplification reasons, I’ll break the investment approaches to real estate down into two primary categories:

Investing in a property for a quick resell and subsequent profit.

Investing in a property and renting it out over the long term.

Even though it can be a challenging enterprise, the benefits of real estate investment far outweigh the potential drawbacks.

First, financing can be a tricky issue for real estate investment beginners. While those purchasing a home for a residence must often pay only a few percent of the total cost, an investor must put forth up to 20% of the purchasing price. However, there are some ways to obtain more attractive financing (Rhode, 2023).

Seller financing, sometimes called owner financing, is one such option. In essence, the property owner becomes like a bank, and you pay a certain negotiated percentage down with a promise to deliver a monthly payment until the property has been paid in full. If it sounds a lot like a traditional mortgage, that’s by design. Most owner-financed plans follow the mortgage model.

Using your existing home as equity for the loan to purchase a rental property is another tactic employed by many beginners. Crowdfunding services are also available if you want to go that route, but beware of the caprice of the internet. You might reach your funding goals, or you might get little to no engagement.

Here are several ways rental investing can benefit you:

Rental income.Renting out the property to tenants results in an ongoing return. The property can become a regular revenue stream so long as the rent payments exceed the owner’s overall monthly maintenance expenses.

Capital growth.Appreciation will make you money over the long term, so long as the property value continues to increase and you make improvements to your property. Paying down your mortgage on the property will also increase equity and gain a return on your investment (RealtyMogul, 2023).

Diversified assets.It’s always good not to put all your eggs in one basket. More diverse investments help resist the market’s ups and downs.

Homeowner tax benefits.Homeowners can increase their returns with numerous tax benefits available only to them, like writing off mortgage interest and making home improvements.

It can protect you from rising rent inflation.Rent inflation is a very real phenomenon, and rents have increased by 8% from 2020 to 2023. Having your own property will protect your assets.

Get retirement income.Your rental house can be like your kids…it can take care of you when you’re old by supplementing your income!

Reliable exit investment.No matter how fads and trends might change, people need a place to live. Homes are reliable investments with good exit trajectories because you can always sell your property if it’s underperforming or you just want to move on to something else.

Passive income stream. Your investment works for you even when you’re off the clock.

With all of these benefits in mind, it’s easy to see why real estate investing is popular. However, remember, as with any investment, there are always risks involved in real estate.

Here are several ways rental investing can be risky:

Expensive repairs.

Maintenance costs or property management expenses can decrease rental income. Unless your property is brand new—and it usually will not be—maintenance issues are going to pop up. Some of them will be minor, but a major one, like foundation repair or a new boiler, might cost tens of thousands of dollars. Repairs can add up quickly! You can build a relationship with a contractor or contractors and often get them to lower their rates in exchange for your guaranteed repeat business to mitigate this risk.

High vacancy rates.

Your monthly rental income may not cover your total monthly mortgage loan payment, especially if you have an apartment property and don’t have all your units full. If a tenant moves out, the landlord still has to pay the monthly expenses. This includes all utilities, naturally, as well as property taxes. Better advertisement of your vacancies, and perhaps lower rents, might help manage the risk of high vacancy.

Lack of liquidity.

Real estate is not a liquid asset and takes time to sell. Property has to be inspected before it’s put on the market, and the market can be fickle. If you need quick cash, real estate isn’t going to be of much help. Hiring a real estate agent with experience in quick sales and staging your property for prospective buyers might help lower the risk.

Entry and exit costs can be high.

Getting out can be almost as difficult and costly as getting in because you have to pay closing costs, broker fees, realtor commissions, and so on. Real estate investment does require a high level of commitment and a willingness to play the long game. You can mortgage your residence home, if you have one, to help offset the high buy-in costs.

The unpredictable real estate market.

Real estate is resilient but offers no guarantees. Sometimes, your property value can decrease rather than increase in value over time. Say the neighborhood goes to hell around you or the city lays a new train track right through your backyard. These types of situations can tank your investment in a hurry. By paying close attention